FACTBOX-South Korea's emissions trading scheme to start in 2015

SEOUL, May 2 (Reuters) - South Korea, Asia's fourth largesteconomy, will launch a national emissions trading scheme in 2015after parliament approved the scheme on Wednesday.

Following are details of the South Korean scheme:

COVERAGE AND TIMING

The programme starts Jan 1, 2015, and will cover more than450 firms or operations emitting more than 25,000 tonnes ofcarbon dioxide (CO2) per year. In total, these represent 60percent of South Korea's total greenhouse gas emissions of about600 million tonnes a year, a little larger than Australia's.

All sectors, from ship-building to refiners, electronics topower firms, will be covered, even buildings such asuniversities, waste disposal sites and big amusement parks.

The first phase will be in 2015-2017, and the second in2018-2020, and from the third phase, it will be a five-year termstarting in 2021.

WHAT'S THE TARGET?

The government has pledged to reduce greenhouse gasemissions by 30 percent by 2020 from projected levels andemissions trading is part of the measures to achieve this.

South Korea's emissions more than doubled between 1990 and2009 and the nation is heavily reliant on fossil fuel imports topower its economy. Carbon emissions growth for the country wasthe highest in the OECD in 2010, rising 9.2 percent but SouthKorea also has green investment plans that are among the mostambitious in Asia.

HOW WILL THE SCHEME WORK?

Details have yet to be finalised, but the government wouldallocate more than 95 percent of the carbon allowances for freeduring the first two phases, while auctioning the rest.

Under emissions trading, a government sets a cap on carbonpollution and relies on an ever-decreasing supply of permits foreach tonne of emissions to push companies to become moreefficient. To help soften the impact, permits can initially begiven out for free and then move towards full auctioning.

The scheme would allow banking and borrowing of allowancesand participants can buy permits from each other. Companiesholding excess allowances can use them later.

It would allow use of U.N. offsets called certified emissionreductions, or CERs, from U.N.-backed clean-energy projects inpoorer nations. Big polluters will be able use overseas offsetsto meet emissions targets.

WHAT WILL BE THE COSTS?

The Korea Economic Research Institute estimates that theimplied carbon price of around 45,000 Korean won ($39.82) pertonne is expected to result in a 12 trillion won fall in annualsales of major nine industries including steelmaking and oilrefining.

HOW DOES IT COMPARE?

Europe's scheme allows member states to allocate a quota ofcarbon emissions allowances to 11,000 industrial installations.Companies get most permits free now but many electricitygenerators will have to pay for all these from 2013.

Companies can buy U.N.-backed carbon offsets from developingcountries if that works out cheaper.

In Australia, about 500 of the country's top greenhouse gasemitters will pay A$23 ($23.85) for every tonne of carbondioxide (CO2) emissions from July 1, rising at set incrementsannually.

The fixed-price period runs for three years before emissionstrading starts in July, 2015, with an initial floor and cap till2018.

($1 = 1,128 Korean won)

(Reporting by Meeyoung Cho; editing by David Fogarty and KeironHenderson)